Avoiding Another Jones Act Fiasco

This just in from the “Closing the Barn Door after the Horse Escaped” department, Congress is saying “never again” to the U.S. flag cargo preference fiasco last summer.

You may recall that the Maritime Administration drew fire from just about the entire U.S. shipping industry for caving to the Department of Energy’s requirements for transporting oil from the Strategic Petroleum Reserve. In short, even though Jones Act vessels — barges, mostly — were available in the Gulf to move product, Marad said they didn’t have the capacity to move the oil quickly enough to meet the Obama’s administration’s Aug. 31 deadline. The result was that all but one contract went to a foreign flag carrier.

That raised the hackles of congressional friends of the Jones Act. The response is a tweak of the purse strings in the 2012 DOT appropriations conference report. Before DOT can spend money to transport oil from the SPR, the department and Marad must consult with the industry and produce a list of U.S. flag vessels “with the single or collective capacity that may be capable of providing the requested transportation services.” My italics.

The report also has a bit of good news for Title XI applicants. The DOT Credit Council, which approves Title XI and TIFIA loan guarantees, will be obligated to post its meeting schedule and agenda, and record its decisions and actions. Applicants for Marad loan guarantees complain they get much harsher scrutiny than the council gives TIFIA applications. This could shed some light on the subject.

Contact R.G. Edmonson at bedmonson@joc.com. Follow him on Twitter @BobinWash.

For the full story: Log In, Register for Free or Subscribe